Call of Duty: Modern Warfare 3 is the eighth installment of the popular first-person shooter.

Modern Warfare 3 (MW3), the eighth in the Call of Duty series, made an astonishing $400 million in sales in the first 24 hours after it launched on November 8, 2011. Furthermore, Activision recently announced that the first-person shooter game became the fastest entertainment product to hit $1 billion in global sales. Hitting that target in 16 days, MW3 edged out the Hollywood film Avatar, which previously accomplished the same feat in 17 days. Activision’s press release drew other parallels between Call of Duty and movie franchises. First, it pointed out the decline in box office revenue last year, although recent data from the NPD group shows video game sales down 8% from 2010 (and yet app sales are skyrocketing…1.2 billion apps downloaded worldwide in the last week of 2011. What?!?!?). Then, it drew parallels between the Call of Duty game series and movie franchises like Harry Potter, Star Wars, and the Lord of the Rings. Even though Activision’s press release was short and to the point, in between the lines was a message to Hollywood: video games are coming to claim the top spot on all of entertainment’s leaderboards.

Consider the recent global projections from PricewaterhouseCoopers about the entertainment industry. The film industry made $84 billion in 2010. Thanks to 3D, Blu-ray, and broadband streaming to electronic devices, the firm projects that the movie industry will grow 6.1% annually to $113 billion in 2015. In that same window of time, video games, which made $56 billion in 2010, are expected to see 8.2% annual growth to $82 billion. This means that the video game industry is growing at a faster rate and will eventually catch up to film, if nothing else stays the same (like Hollywood being able to draw people in as TV’s become more sophisticated).

But it’s difficult to tell if these projections take into account three important factors. The first is that video games are a sector actively embracing innovation much more than the film industry has in recent years, 3D being the lone exception. The second is that innovations, such as Facebook’s API, social gaming, and tablets like the iPad, have created entirely new segments for video game development, but in contrast, the film industry can only use these platforms as delivery devices for the same content, not brand new content just for those platforms (with the exception of web series, which are not contenders for significant revenue). With technological advances and digital innovation on a streak, odds are in the next five years avenues for new game markets will open up to a much larger degree than they will for film. Finally, everyone is thinking about games from businesses using gamification strategies in advertising to educations exploring serious games for revitalizing dry subjects locked in antiquated teaching methods. Games are becoming a bigger part of everybody’s lives.

Image from The Economist based on PricewaterhouseCoopers data

So in light of these trends, it makes sense why Activision would put movie franchises in its crosshairs. Collectively, the Call of Duty games have brought in over $4 billion since 2003. Compare that to the biggest movie franchise, Harry Potter, which holds a worldwide gross of $7.7 billion, followed by James Bond at $5.1 billion, and Star Wars at $4.4 billion. Now in light of the fact MW3 is still selling and Activision has already stated that another Call of Duty game is coming in 2012 (and the domain name for Black Ops 2 was recently acquired), the franchise will likely surpass these franchises in a few years. Now we all know that Harry Potter and Star Wars are more than just movies, as they include a much larger scope of products such as books, toys, and yes, video games. So the question is: can the Call of Duty franchise realistically expand beyond the video game format?

For better or for worse, Activision is trying to answer that question by pushing the limits of what a game franchise can be. Let’s start with its new service Call of Duty Elite, which delivers a steady stream of 20 batches of downloadable content over the next 9 months (it also recently got a free iOS app with stat analysis). Launched at the same time as MW3, the service has 6 million subscribers, with 1 million of those paying the annual $50 fee to be premium players. While downloadable content for games is something that online platforms like Steam have been doing for years, the rate at which it is coming out for MW3 is almost like a weekly TV show. Speaking of which, an original show of some kind is in the works with Jason Bateman and Will Arnett’s production company dumbdumb to be delivered to the Elite monthly subscriber base. Also, in fairly predictable fashion, you can get your hands on a slew of MW3 accessories, like keyboards and mice, headphones, “gaming glasses”, and even an MW3 iPhone case. Then, and this is a bit bizarre, Jeep launched an official MW3 version of their popular vehicle. And what about a film? Well, rumors have been kicked around for a few years, but nothing has ever been set in stone. If you want a sense of what a Call of Duty movie might look like though, check out the trailer for the upcoming Act of Valor, which shows real Navy SEALS using actual tactics in hypothetical missions.

The future of the Call of Duty franchise looks very bright (image courtesy of Ubergizmo).

What’s amazing is that as big as the Call of Duty franchise is, it is still the little brother to other game franchises, like Nintendo’s Mario, which dominates them all with 31 video games selling over one million copies since 1995 and a collective total of over 260 million of the core games sold. Then there’s Pokémon which has had a strong market beyond the video games from collective card game and TV series. Other game franchises on par with Call of Duty include Grand Theft Auto, The Sims, and Madden NFL. And none of these game franchises are ready to stop, especially in light of the recent motion sensing technology like Kinect, the market-disrupting second screen of the Wii U, and other innovations to come in the next generation of game consoles that will continue to add new spins on game formulas that work. And what about the most recent addition, Angry Birds, with its pillows, iPhone cases, board games, and now a movie is in the works.